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CrossCut Ventures raises $75M for its third fund

The firm also announced Clinton Foy as its fourth Managing Director, to focus on gaming

Innovation series by Steven Loeb
June 23, 2015
Short URL: http://vator.tv/n/3e5b

Venture capital firm CrossCut Ventures has just raised a new venture fund, its third overall, worth $75 million, it was announced on Tuesday.

While CrossCut3 was originally targeted at $50 million, the fund was oversubscribed With this latest fund, which included investors such as The John Irvine Foundation and Top Tier, Crosscut now has a total of $100 million under management.

"We're trying to position this fund as the company building capital of Los Angeles. We are looking to be the first institutional money in the best and brightest ideas that the ecosystem is producing," Brian Garrett, Managing Director of CrossCut Ventures, told me in an interview.

"I would describe the core DNA of the L.A. tech scene as being focused on the following: eCommerce, AdTech, Mobile, SaaS, Content, Marketplaces and Gaming."

In addition to the new fund, the firm is also announcing Clinton Foy as its fourth Managing Director, joining Garrett, Rick Smith and Brett Brewer.

Foy is the former COO and Head of US Operations for  Square Enix and has been a Venture Partner with CrossCut for last two years. He will now be leading CrossCut's initiatives in the gaming sector. 

"We now have four full time Managing Directors, and three of us are ex-entrepreneurs," Garrett told me. "Bret was in AdTech, Clinton was in gaming and I was in e-commerce, so I understand that space and have relationships, but all four of us are capable of looking at things across that spectrum."

CrossCut plans to build a portfolio of between 25 to 30 companie out of this fund, with an initial investment of $1 million, followed by another $1.5 million to $2 million in each one as follow-on.

This fund marks a bit of a turning point for CrossCut; with this fund, the firm is going to start to take a lead role on the companies it puts money in, Garrett told me.

"A typical investor syndicate takes around 20 percent to 30 percent of a company. Iur goal is to get north of 10 percent with our dollars," he said. "That means half leading, with one or two co-investors, but trying to take a lead role, setting terms and getting board seats."

CrossCut has already made nine investments since its first closing in November 2014,participating in the following rounds: $4.9 million for mobile-gameplay live streaming platform Mobcrush$3 millionfor smartwatch app studio Little Labs$2.5 million for HelloTech, a provider of support for technology and electronics; $4 million for Conversion Logic, a provider of analytics for video ads; $6.5 million forStarMaker, a digital-first music talent platform; and $12 million for Vulcun, a tournament site for fantasy e-sports.

"Our orientation is four full time Managing Directors. Rick and have worked together, investing for 15 years," Garrett said. "That is our unique differentiation. We are largest seed fund in LA, which will position us the as company building capital of LA."

Since its founding in 2008, CrossCut has invested in 45 companies. Of those, nine have exited, including five which were sold to public companies.

Its first fund was CrossCut 1, a $5 million fund, from which 10 of 18 investments made positive returns. Investments included JustFab, Shoedazzle, Club W, GumGum, Ipsy, Docstoc, The BlackTux and 
SuperEvil MegaCorp

CrossCut 2 was a $16 million fund, raised in 2012, which invested in companies such as Lettuce, which sold to Intuit; GradientX, which sold to Amobee; and Data Science.

(Image source: crosscutventures.com)


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